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TURI, paying capital, despite lower sales
🎯 🚗 📈Rp1,775
Last 12 months cashflow +Rp279bn ⬇️
September 17th, 2020
⏰ 1 minute read
⏰ 1 minute read
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Sales
Sales in the 2Q fell -60%, the fourth of the last five quarters with negative growth. As with most of the transport stocks, sales were below forecast & are now 48% below 2015 levels! Vehicle sales fell, -64%, workshop -42%, leasing only -13%. From Rp1.28tn in 2Q 2020, we predict sales will recover back to Rp2.2tn by the 1Q 2021.
Cashflow
Despite the sharp sales slowdown, cashflow has amazingly remained positive although lower,. Excluding working capital cashflow was at Rp47bn as of the 2Q. Including positive working capital & an investment gain from asset sale, cashflow was a large positive Rp445bn. With our forecast sales recovery & minimum investment spend, cashflow will average Rp57bn a quarter in this next 12 months.
Sales in the 2Q fell -60%, the fourth of the last five quarters with negative growth. As with most of the transport stocks, sales were below forecast & are now 48% below 2015 levels! Vehicle sales fell, -64%, workshop -42%, leasing only -13%. From Rp1.28tn in 2Q 2020, we predict sales will recover back to Rp2.2tn by the 1Q 2021.
Cashflow
Despite the sharp sales slowdown, cashflow has amazingly remained positive although lower,. Excluding working capital cashflow was at Rp47bn as of the 2Q. Including positive working capital & an investment gain from asset sale, cashflow was a large positive Rp445bn. With our forecast sales recovery & minimum investment spend, cashflow will average Rp57bn a quarter in this next 12 months.
Doing amazingly well despite the sales drop, cheap & paying out capital, shares can rise further as sales recover now...
Balance sheet
The balance sheet has been in net debt since 2015, but the net debt has been declining since 2017 & at a faster rate as investment has slowed since 2019. With the asset sale in the 2Q, net debt fell to just Rp294bn. With our forecast cashflow & a Rp92bn dividend, net debt will reduce to Rp160bn in 12 months.
Profit
With the heavy drop in sales, TURI reported the first net loss in 5 years, -Rp18bn in the 2Q. The cash cost ratio of net profit add depreciation & non cash costs minus sales as a % of sales increased to 99%. We use the 12 month average 96% as sales recover to predict a next 12 month loss, -Rp5bn.
Value
TURI has been paying out capital since 2017 & the share price has followed. Payouts are accelerating now. At Rp7.2tn it’s 0.93x sales, 1.3x assets, 1.82x equity with no profitability but a 1.3% yield. We cut our cashflow forecast to Rp226bn. At 1.6% with a 0.7x adjustment as they head to net cash, gives a higher target price of Rp1,775.
The balance sheet has been in net debt since 2015, but the net debt has been declining since 2017 & at a faster rate as investment has slowed since 2019. With the asset sale in the 2Q, net debt fell to just Rp294bn. With our forecast cashflow & a Rp92bn dividend, net debt will reduce to Rp160bn in 12 months.
Profit
With the heavy drop in sales, TURI reported the first net loss in 5 years, -Rp18bn in the 2Q. The cash cost ratio of net profit add depreciation & non cash costs minus sales as a % of sales increased to 99%. We use the 12 month average 96% as sales recover to predict a next 12 month loss, -Rp5bn.
Value
TURI has been paying out capital since 2017 & the share price has followed. Payouts are accelerating now. At Rp7.2tn it’s 0.93x sales, 1.3x assets, 1.82x equity with no profitability but a 1.3% yield. We cut our cashflow forecast to Rp226bn. At 1.6% with a 0.7x adjustment as they head to net cash, gives a higher target price of Rp1,775.
